The Price of Campaign Promises

Photos courtesy of NBC News.

Written by Anand Balaji

An important part of any campaign season are the grand proposals that candidates make to gain public support. The 2016 Presidential race is no exception.

Single-payer healthcare, free college education, a Mexican-American border wall, and the mass deportation of illegal immigrants have all been proudly touted as ways to fix America. Skeptics question whether these measures are realistic or could actually pass a heavily partisan Congress. But an even more important consideration is how much these proposals would cost the American taxpayer.

Candidates Donald Trump, Senator Ted Cruz, and Senator Bernie Sanders have arguably gone furthest with sweeping big-budget ideas and have explained how they’d be funded on their websites. A closer examination of the money required to bankroll these ambitious plans, however, shows that the candidates’ estimates could be far off the mark.

Every American voter should understand not just what these proposals would do, but also how significantly they would affect their tax rate and the national budget.

Single-Payer Health Care

In the battle for the Democratic nomination, a defining area of contention between Senator Bernie Sanders and Secretary Hillary Clinton is how each would tackle the issue of health care. While Clinton’s proposals revolve around increased Medicaid funding and lowering drug costs, Sanders is pushing for radical reform: single-payer health insurance. Dubbed by Sanders as “Medicare for all,” the single- payer system would replace private insurance agencies with a national body that administers health insurance. The promised advantages would be the complete elimination of all the traditional fees associated with health coverage (deductibles, premiums, co-pays) and also successfully insuring all Americans from birth.

The Sanders website estimates the cost of this program to be $1.38 trillion per year and outlines an expansive payment plan including a 6.2% payroll tax, 2.2% household income premium, increased progressive income taxes, and a capital gains tax.

The important question to ask then is: Despite the significantly higher taxation, do the costs saved by a national insurance body actually save money for Americans?

For the upper tier the answer is likely no.

With a 43% marginal rate on income above $500,000, it’s unlikely that the removal of monthly premiums would make single-payer worthwhile for the upper class.

For the middle class the answer is muddled, largely depending on the current insurance
rates a family is paying and whether Sanders would have to raise taxes even higher to properly fund the system. Critics point out that, with the elimination of co-pays, the number of hospital visits could drastically increase and lead to higher medical costs for the government. In addition, the Sanders plan requires a federal overhaul of medical insurance, meaning the federal government would have to cover state costs. All that would seem to make his $1.38 trillion cost estimate too low.

Border Wall and Mass Deportation

On the opposite side of the political spectrum, the two leading Republican candidates have proposed radical plans to solve the nation’s immigration crisis. Trump supports building a wall across the Mexican border that he estimates would cost $8 billion. Trump’s demand that Mexico pay for the wall has been ridiculed by the Mexican government, and his fiercely anti-taxation stance doesn’t provide an alternative way to pay for the project. Trump’s website outlines a series of punitive measures to take against the Mexican government until they comply, including increased visa fees, limits on NAFTA workers, and higher tariffs.

These actions, however, are unlikely to do much to sway Mexican authorities, and this border wall would therefore require substantial government expenditure. Experts estimate that a properly constructed wall would cost “tens of billions” not including the increased need for border patrol agents and drone surveillance to enforce security.

Both Trump and Cruz have both promised to reverse President Obama’s amnesty initiative and to immediately deport all illegal immigrants residing in the United States. How they plan to deport these immigrants so rapidly while still recognizing their right to due process is unclear. However, both candidates have pledged to triple the number of Immigrations and Customs Enforcement (ICE) officials to enforce their plans.

On his website, Cruz makes absolutely no attempt to clarify the funding for the deportation of the more than 11 million immigrants living in the U.S. Trump claims that ending IRS tax benefits to illegal immigrants would completely fund his plan; experts strongly disagree. Using a cost of $12,500 per deported immigrant, a number estimated by Daniel Ragsdale, the deputy director of ICE, the total deportation of all illegal aliens would range from anywhere to $100 billion to $200 billion.

Free College Education

Another significant policy plan that strongly separates Sanders from Clinton is his call for free tuition at public colleges and universities. His proposal to achieve this requires $2 in matching federal funds for every $1 that states would pay. Sanders also wants to cut student loan interest rates from 4-5% to 2% and allow refinancing on current student debt to secure a lower rate.

This policy could have profoundly positive effects on the welfare of American society, and Sanders promises that this specific proposal will not require increased taxation on the public. His exact proposal is to levy a .5% fee on stock trades, .1% on bonds, and .005% at derivatives, which together he predicts would be sufficient to pay the projected $75 billion annual cost. However, a report by the Tax Policy Center actually increased those fees and still found that the Sanders plan falls about $20 billion short of the required revenue.

1 Comment on The Price of Campaign Promises

  1. wow fantastic article im very impressed by your word usage and general knowledge on all things

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